When Roadrunner Transportation Systems Inc. pulled up stakes in Wisconsin and moved its headquarters to the Chicago arealast year, it left behind a legacy that few companies would brag about.

Two ex-employees being hauled out of their Cedarburg homes in handcuffs and charged with fraud and conspiracy for their key role in what federal prosecutors say was a $245 million stock fraud.

At least four shareholder lawsuits charging that top executives cooked Roadrunner's books to boost the value of the company's stock — including the shares owned by the men who led the firm at the time.

A stock that began falling in 2017 when Roadrunner said investors could no longer depend on the accuracy of past financial statements that showed the company posting large profits.

Restating its financial reports this year and disclosing that the company overstated its net income — or profit — by approximately $66.5 million from 2011 through the third quarter of 2016.

And more negative news involving Roadrunner, which moved its headquarters from Cudahy to Downers Grove more than a year ago but still has more than 300 employees in Wisconsin, is expected to be made in Wisconsin courtrooms.

Courtroom observers predict that the indictment issued in June against former Roadrunner controllers Bret Naggs, 52, and Mark Wogsland, 53, will not be the last criminal charges issued in the case. The grand jury indictment charges Naggs and Wogsland with securities fraud, wire fraud, conspiracy to commit the frauds and conspiracy to falsify a public company's books and making false statements to a public company's accountants.

Wogsland and Naggs "engaged in a massive securities and accounting fraud scheme that misled shareholders, regulators, and the investing public, and ultimately caused a loss of more than $245 million in shareholder value,” Acting Assistant Attorney General John P. Cronan said in a statement summarizing the indictment against the men. Wogsland and Naggs had each worked as a controller in Roadrunner's truckload segment.

The $245 million figure is equal to the amount authorities say shareholders lost when the company disclosed its true financial figures.

The indictment alleges that from 2014 to 2017, Naggs, Wogsland and their unnamed co-conspirators found at least $7 million in overstated accounts on the balance sheet of one of Roadrunner’s largest operating companies and left them on the company's books.

“Mr. Naggs and Mr. Wogsland and their co-conspirators used a combination of methods to fraudulently manipulate Roadrunner's publicly recorded earnings and mislead Roadrunner's shareholders, independent auditors, regulators and the investing public about the true nature of Roadrunner's financial condition,” David Stiers, a prosecutor from the U.S. Department of Justice's Washington, D.C., office, said during the pair's arraignment in Milwaukee.

Serious charges — the type that are often leveled at people much higher on the corporate ladder.

Federal prosecutors have already turned over more than 2 million sheets of paper contained in more than 700,000 documents, court records show.

"It sounds like it (the indictment) might be the means to an end," said Stephen Kravit, a Milwaukee defense lawyer. "They need them to rat out ... the people who would have benefited from that type of scheme."

Jeffrey Cramer, a former federal prosecutor in New York and Chicago, agreed and said the tactic often succeeds.

"The feds aren't doing this just to indict a couple of former controllers," said Cramer, now a managing director at Berkeley Research Group. "They're not falling on their swords."

Sending a message

Even the way Naggs and Wogsland were arrested seems designed to send them a message. Often, people who do not have criminal records and are not considered flight risks are allowed to turn themselves in when facing nonviolent white-collar crime charges. This is particularly true when the defendants know about the investigation.

But Naggs and Wogsland were both arrested in their suburban homes by the FBI and other federal agents in the early morning hours on June 15.

"When you go to somebody's home at 6 a.m., rouse them out of bed and rear cuff them, you're showing the individual the seriousness of the situation," Cramer said. "That's a message."

Cramer speculated that Naggs and Wogsland might have something to offer in plea bargains.

"It would be unusual for the two controllers to not have information and not be willing to talk," Cramer said.

Naggs' attorney, Mark Cameli, did not say whether he agreed with the speculation that his client is the quintessential small fish that the feds hope to use to catch the bigger fish.

"If it's true," Cameli said. "That is unfortunate."

Ryan Hedges, Wogsland's attorney, who like Cameli is a former federal prosecutor, argued in a bail hearing the day of the arrests that his client was well aware of the investigation and never left town.

"This could be a billion-dollar case for all we know and it wouldn't change the fact that Mr. Wogsland has known" about the probe for months, Hedges said at the hearing. "He was surprised this morning by the way ... he's been brought before you. But he has been waiting for the government to basically contact him about this case for many, many months. He's going nowhere."

Cameli noted that Naggs had been interviewed by federal authorities about a year before the arrest but heard nothing since then.

Cameli told the judge that Naggs was scheduled to close on the sale of his house in Cedarburg and buy a home in Grafton on the day he was arrested.

"This morning was a surprise," Cameli said.

Cameli and Hedges both declined to comment about the specifics of the cases, except to say they would each mount a vigorous defense.

"The indictment has significant misstatements," Cameli said.

U.S. Magistrate Judge Nancy Joseph first allowed Naggs' house sale to continue and freed both men on recognizance bonds.

Shareholder lawsuits

As the criminal probe continues, Roadrunner, which was seen as a well-run, fast-growing trucking firm, and several of its former top executives are battling lawsuits brought by angry shareholders.

Today, the company is much more reticent.

In an email statement issued last week through a public relations firm, Curt Stoelting, Roadrunner's chief executive officer, said the ongoing Justice Department "investigation is focused on former employees of Roadrunner" and that "the company has, and will continue to, cooperate fully with the DOJ and SEC (Securities and Exchange Commission) investigations."

The statement noted that since the 2017 announcement that its financial statements were wrong, Roadrunner has "implemented corrective actions to strengthen the company’s internal compliance processes and controls, including replacing the former management team with a new experienced executive leadership team."

Neither Naggs not Wogsland were named in the suits. Ex-Roadrunner chairman Scott Rued, ex-CEO Mark DiBlasi and ex-chief financial officer Peter Armbruster are each named in some of the actions, including the lead federal lawsuit filed by the Mississippi public employee pension fund.

"Quarter after quarter and year after year, the executive defendants deceived the market by falsely stating Roadrunner's financial results and performance metrics," the Mississippi suit charges.

The suit charges that the top executives sold tens of millions of dollars worth of stock at prices that were artificially inflated because of the incorrect financial statements.

The suit said that on May 20, 2013, DiBlasi sold 44,794 Roadrunner shares for more than $910,000 and that Armbruster sold 130,000 shares for $2.1 million.

In August 2013, the suit says that HCI Equity Partners, a Chicago fund co-founded and managed by Rued, collected more than $88 million when it sold almost 3.5 million shares of Roadrunner stock in a secondary stock offering. HCI owned about 20% of Roadrunner's shares this year, down from about 50% in 2012, SEC records show.

Roadrunner argued in a court filing that even if the correct financial statements were posted in 2013, it would have had little or no impact on the sale prices of the shares sold by HCI, DiBlasi and Armbruster.

"Although the Company’s net income was restated downward in every period, the smallest adjustment (approximately 6.2 percent) was in 2013," the company's lawyer wrote, adding that "the biggest adjustments to the company’s net income began in the third quarter of 2015, well after Mr. DiBlasi and Mr. Armbruster had made their last sales. HCI sold the most shares, 4.45 million, in 2013, well before any of the disclosures at issue here."

The company and the key defendants have denied any wrongdoing and are asking that the suits be dismissed.

Though shareholder suits are common when a company publicly admits a misdeed or error, the Roadrunner suits are different, said Eric Zagar, a Pennsylvania attorney who brought one of the suits.

"This is a pretty serious financial fraud" being alleged, he said. "This is not your garden variety (shareholder) suit."